In Browning-Ferris, Businesses Lose As the Board Crafts a Solution in Search of a Problem

Marking a sea-change in labor law and a departure from decades of settled precedent, the National Labor Relations Board formulated a new joint employer standard in August 27’s Browning-Ferris Industries of California, Inc. decision.

For the past three decades, whether a joint employer relationship existed turned on the “single employer” test, that is, whether “two nominally separate entities are part of a single integrated enterprise so that, for all purposes, there is in fact a ‘single employer.’” NLRB v. Browning-Ferris Industries, Inc., 691 F.2d 1117, 1112-23 (3d Cir. 1982); adopted by the Board in TLI, Inc., 271 NLRB 798 (1984) and Laerco Transportation, 269 NLRB 324 (1984). Under the settled framework, an entity could only be found to be a joint employer if it exercised actual control over the terms and conditions of employment of another entity’s employees.

Last week’s decision injects a great deal of uncertainty into an area of labor law which was, up until now, quite predictable. Under the new rule, an entity that maintains any degree of indirect or reserved control over any of the terms or conditions of employment (such as wages, hours, hiring, firing, discipline, or direction of work) of another entity’s employees may suffice to trigger joint employer status.

This change is not to be understated, and will have immediate impacts in some industries:

  • Franchisors.  Although the Board has traditionally not held franchisors to be joint employers with franchisees, many (if not all) franchisors may be found to be joint employers with franchisees under the new rule.
  • Staffing Agencies and Contractors.  Although staffing agencies and contractors did not have the indicia of control over employees placed with their customers to be considered joint employers, many staffing agencies and contractors may now be considered joint employers under the new standard.

This is, however, by no means the full extent of the new rule. As the Board’s dissenting members pointed out, the Board’s new standard “appears to be virtually unlimited” and may also apply to a host of other scenarios, such as insurance companies that require employers to maintain safety or security standards, banks or other lenders who require performance measurements in their financing terms, consumers or small businesses who dictate the time, manner, or some method of performance of contractors, or indeed, “[a]ny company that is concerned about the quality of the contracted services.”

In their newfound capacity as joint employer, affected companies may now be held responsible for unfair labor practices committed by a contractor. In the collective bargaining context, the joint employers’ employees may be included in the bargaining units of employees of a contractor. Furthermore, litigation unfolding around the uncertainty created by the amorphous newly crafted test will prove costly.

An appeal of the Board’s decision is likely forthcoming, and it is still possible congress may weigh in. If the decision stands, maintaining economic viability in the wake of Browning Ferris for some companies may require nothing short of a fundamental change to their business models. For others, changes to certain terms in contracts between putative joint employers may be necessary to limit this new area of potential liability. For now, all businesses should carefully examine their contractual relationships with customers and contractors to stay informed of how this change in the law may apply to their operations.

This article was included in the Benesch Law @Work Newsletter. Please click the link to read more.

Chris Lalak focuses his practice on representing employers in employment litigation and counseling, as well as representing employers in traditional labor law matters. He has experience litigating discrimination claims, covenants not to compete, trade secrets, worker’s compensation cases, and matters before the National Labor Relations Board.

NLRB Declares “Conflict-of-Interest” Policy to be Unlawful on Its Face

In a controversial decision, the NLRB found that a conflict-of-interest policy in an employee handbook is unlawful on its face.  This ruling could deem many current conflict-of-interest policies unenforceable, creating harsh consequences for employers.

On June 18, 2015, the National Labor Relations Board held that an administrative law judge was correct in determining that a policy in the employee handbook that prohibited a “conflict of interest with the hotel or company” was facially unlawful.[1]  Chairman Pearce agreed that the policy, on its face, would have a chilling effect on the employees’ Section 7 rights. Continue reading

Supreme Court Casts Doubt on EEOC’s Pregnancy Guidance

In reviving a lawsuit brought by a pregnant driver against UPS, the U.S. Supreme Court held last week that employers cannot deny accommodations to pregnant workers that are offered to other employees with similar restrictions simply because it is “more expensive or less convenient” to do so.

The ruling in Young v. United Parcel Service, Inc., 575 U.S. ___ (2015), is viewed as a victory for pregnant workers who seek light duty assignments from employers so that they may keep working.  It also may prove to be a setback for the Equal Employment Opportunity Commission (“EEOC”). Continue reading

Employers Who Want to Hire Foreign Workers in H1-B Status Should Start the Process Now

Employers who wish to hire foreign workers in a “specialty occupation” this year should start the process now in order to submit their petitions on April 1, the first day that U.S. Citizenship & Immigration Services (USCIS) will be accepting H-1B visa petitions.

By law, only 20,000 H-1B visas are issued to foreign workers holding a U.S. Master’s degree and 65,000 H-1B visas are issued to individuals of extraordinary ability (those who possess, by education and/or experience, at least the equivalent of a U.S. Bachelor’s Degree).  Continue reading

The Employee Zone Of Privacy

Employers should recognize an employee’s zone of privacy in the workplace.  Business owners and managers need to understand that while they have their employees’ attention for much of the workday, there are limits.  An employer must recognize how difficult it is to come to work day after day with the same individuals.  Employees are often asked to accomplish difficult tasks.  Employees are often required to perform these tasks in a very short time period.  It only compounds the pressure and stress of everyday work life to have a boss who insists upon knowing every detail of their subordinates’ lives.  That is often a warning sign, a red flag, for trouble.

If an employer is intruding upon the subordinate’s life, I often see that as a sign that there is going to be some type of workplace complaint.  In fact, there are several laws which caution against such behavior. Continue reading

Ohio Supreme Court Holds that an Actual Report of Suspected Abuse or Neglect to the Ohio Director of Health Is Not Required to Support Statutory Retaliation Claim

Rather, employees need only report the suspected abuse or neglect of a nursing home resident to their supervisor, coworker or a resident’s family member ‒ and not to the Ohio Director of Health ‒ in order to state a statutory claim of retaliation.

The Court’s 6-1 decision in Hulsmeyer v. Hospice of Southwest Ohio, Inc. makes it clear that long-term and residential-care facilities in Ohio may face civil liability under Ohio R.C. 3721.24 for discharging, demoting or otherwise retaliating against employees who report suspected abuse or neglect to a supervisor, coworker or a resident’s family member.  The Court also clarified how courts should interpret two Ohio statutes, R.C. 3721.22 and R.C. 3721.24,  which govern such reporting. Continue reading

With the Recent Passage of the NLRB’s “Ambush Election Rules,” Employers Must Be Pro-Active in Their Union-Free Message

On December 12, 2014, the National Labor Relations Board took the long-anticipated step of finalizing its new “ambush election” rules, which will make it easier for unions to organize employers. The driving force behind the new rules is clear: unionization in the private sector is, and has been, steadily declining. Today, only 6.7% of America’s private-sector workforce is unionized, down from rates in excess of 20% in the 1980’s.  Looking to turn the tide, organized labor has spent billions in lobbying efforts in recent years, seeking labor-friendly rule-making and legislation.  The most recent attempt at pro-union legislation – 2009’s so-called “Employee Free Choice Act” – never passed Congress. Continue reading

Guns In The Workplace Versus Employer’s Property Rights

There is a growing trend of state laws prohibiting employers from banning firearms on employers’ property.  These laws are otherwise known as “parking lot laws.”  At the state level, more and more states appear prepared to enact laws that would ban an employers right to prohibit firearms on their property.  Some of these laws provide employer’s with immunity from liability if those employees cause harm with those firearms on the property.  Other proposed laws provide no such protection from liability.  In either case, the extent of an employer’s liability and what they should do to minimize it is not clear. Continue reading

Breaking News: NLRB Overrules Register Guard and Holds that Employees Have Statutory Right to Use Their Work Email for Union Organizing

The National Labor Relations Board (“NLRB”) ruled on December 11, 2014, in a 3-2 split, that employees who have been given access to their employer’s e-mail system for work purposes must be allowed to use their work email during  nonworking time to engage in communications  protected by the National Labor Relations Act (“NLRA”), such as communications regarding union organizing.  Employers that maintain any policy restricting that use are now in violation of Section 8(a)(1) of the NLRA.  This decision expressly overrules the NLRB’s 2007 Register Guard[1] decision, which had held precisely the opposite—that an outright ban on employee use of work email was lawful so long as it was indiscriminately applied because, among other reasons, the employer has a property right to control the use of its own equipment and property.   Through its new decision, in Purple Communications, Inc., 361 N.L.R.B. No. 126, the NLRB has severely constrained that right and made it much easier for employees to engage in union activity at work.  Continue reading